France Fears Economic Fallout of Strikes

JEAN-MARIE GODARD

Published 8:00 pm, Monday, June 2, 2003

Associated Press Writer

The government warned Tuesday that protracted public sector strikes would have "dramatic consequences" for the French economy as Paris commuters faced yet another day of scant subway and train services and airlines canceled flights.

The second general walkout by state employees in less than a month embarassed the government as it hosted leaders from the world's wealthiest nations in the Alpine town of Evian.

Demonstrations were planned in more than 100 French towns and cities to demand the government back down from plans to overhaul France's overburdened retirement system.

But with hard-line unions now threatening long-term walkouts, concern mounted over the economic fallout.

"Everybody must understand that a massive strike has dramatic economic consequences," government spokesman Jean-Francois Cope said on France 2 television. "The first victims would be the weakest and most fragile of our fellow citizens."

Major European airlines canceled flights to try to limit the damage. Air France said it had scrapped 65 percent of its short- and medium-haul services Tuesday, though it said long-haul flights, to destinations such as North America and Asia, would not be affected.

British Airways said it would likely cancel at least 90 out of 120 flights to or from France, while Germany's Lufthansa canceled 97 flights out of 138.

Employees of the national railway got a head start, walking off the job Monday evening. About one train out of three was running in France, though Eurostar service to Britain was expected to operate at near-normal levels.

The hard-line CGT union, which is close to the Communists, urged Paris public transport workers to start striking late Monday, while air traffic controllers joined in Tuesday.

Teachers, tax agents and postal employees were also on strike.

France's minister for regional affairs, Patrick Devedjian, accused the CGT union of "wanting to paralyze the country to roll back the government simply out of principle."

His comments followed a threat by CGT chief Bernard Thibault to extend the walkouts beyond Tuesday.

"If employees decide, we will have strikes, demonstrations, rallies, the whole range of union initiatives, as long as needed," he said Monday.

The CGT and other unions are pressing for new negotiations on how to reform the pension system.

Unions oppose a government reform plan that would increase the number of years employees must work to receive full retirement benefits.

The plan would force public sector employees to work 40 years to retire with full benefits, as the private sector currently does, instead of the present 37.5 years.

The plan was approved last week by the Cabinet and now goes before lawmakers for debate and a vote.

Prime Minister Jean-Pierre Raffarin says the pension reform is needed to prevent the pension system from collapsing.

In Austria, schools were closed and trains and buses idled Tuesday as hundreds of thousands of public sector employees took part in postwar Austria's biggest strike to protest planned pension cuts.

The strike was the second nationwide in less then a month and affected all public transport, major industries, schools, kindergartens, utilities and a wide range of services. Policemen and women were conspicuously absent from the streets, with officers responding only to emergency calls.

As on May 6, the strike was called by the Austrian Federation of Labor Unions to oppose pension reforms cutting benefits by at least 10 percent.

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Chancellor Wolfgang Schuessel's centrist-led government coalition says the state can no longer afford to fund pension schemes as generously as in the past.